Chesapeake Energy Corporation (NYSE:CHK): CNG in a Box Infrastructure Solution
Oh, how I miss the days when gas was only $0.79 per gallon. It may have been a long time ago, but thereâ€™s not a time I donâ€™t think about it whenever Iâ€™m refueling at the pump. Yesterday, when I filled up my Chevy, I paid $3.81 per gallon, which cost about $50 total.
By the end of this year, itâ€™s likely Iâ€™ll spend around $2,600 in gas alone. Around the United States, the average American is spending closer to $4,500 per year in gas.
I donâ€™t know anyone who doesnâ€™t expect prices to only head higher in the coming years, either.
However, GE (NYSE:GE) and Peake Fuel Solutions, a Chesapeake Energy (NYSE:CHK) affiliate, just unveiled a new infrastructure solution that can instantly save about 40% in fuel costs.
Itâ€™s called â€œCNG-in-a-Box.â€
And it could very well bring us into the future of transportation.
It All Starts Here
CNG-in-a-Box is a fully-integrated fueling supply system that enables gas retailers to add low-cost compressed natural gas pumps at their current locations.
In a press release from GE, the company states:
â€œThe CNG-in-a-Box system compresses natural gas from a pipeline into CNG on-site at a traditional automotive fueling station or industrial location. CNG powered vehicles such as taxis, buses or small trucks, as well as individual consumer vehicles, can then refill their tanks using a dispenser with the same look and feel as a traditional diesel or gasoline dispenser.â€
Hereâ€™s a glimpse at what CNG-in-a-Box looks likeâ€¦
[Source: GE Ecomagination]
Of course, the problem right now is, there arenâ€™t many cars on the road that run on CNG, nor are there many pumps available for consumers.
Today, there are only about 1,000 stations around the U.S.that offer CNG and 250,000 CNG vehicles on the road.
In comparison, there are roughly 243,000,000 registered cars in the United States and around 110,000 gas stations.
But CNG-powered vehicles are becoming more and more of a viable reality.
- Roughly 40% of garbage trucks sold last year run on natural gas.
- A coalition of 22 states just released a statement saying they would buy 10,000 CNG vehicles if automakers build them.
- The Honda Civic Natural Gas, currently the only light-duty manufactured CNG vehicle in the United States, is selling out faster than itâ€™s being made.
- The Chevrolet Silverado 2500, Dodge Ram 2500, Ford F-250 pickups, Chevy Savana van, Ford Transit and Transit Connect van are all now available in CNG models.
Bottom line: The CNG vehicle market is growing and GE and Chesapeakeâ€™s latest all-in-one CNG fuel supply system is only set to accelerate natural gas as Americaâ€™s transportation fuel of choice.
And thereâ€™s a good opportunity for early-in investors to take advantage of this budding trend, as well.
Iâ€™m talking about Chesapeake Energy.
An Undervalued Play
Thereâ€™s no doubt Chesapeakehas had a slew of bad press over the past year.
Its CEO was caught in a scandal where $1.1 billion in unreported loans was made to him by Chesapeake-affiliated companies.
A few months later, he was caught in a bid-rigging scandal.
He even lost his Chairman post in the company as a result of everything.
As expected,Chesapeakeâ€™s shares were humbled with him. In the last year,Chesapeakeâ€™s stock is down 25%. Looking out even further, itâ€™s down over 40% since March of 2011.
But this decline appears way overblown, and Chesapeakeâ€™s insiders know it.
Over the past six months, they purchased over 125,000 shares, worth $2.5 million at the current stock price.
You see, regardless of Chesapeakeâ€™s bad PR, its quarterly earnings growth is still at an unbelievable 90% year-over-year. And operating and profit margins are both hovering close to 20%.
Right now could be a great time to take a closer look at Chesapeake. After all, the future of U.S. transportation could eventually belong to the CNG market, and Chesapeake would be a major benefactor as it comes to fruition.